How Do Foreign Banks Contribute to Economic Development in Transition Economies - How Much Do We Know About Challenges and Opportunities?
Proceedings of the 14th Annual World Business Congress IMDA, 2005
Posted: 19 Dec 2008 Last revised: 10 Feb 2011
Date Written: 2005
This paper contributes to the finance-growth debate by reviewing the relationship between financial sector foreign direct investment and economic growth. The positive view of the finance-led growth hypothesis normally focuses on more open and liberalized financial systems. Banking markets in Central European transition economies are an extreme case of openness as they are majority-held foreign. Does this spur economic growth? We contribute to the development literature by discussing through what kind of transmission channels foreign banks may have an impact on economic growth in transition economies. This is important for emerging market development.
Keywords: economic development, financial services foreign direct investment, foreign banks, financial sector economics, transition economies
JEL Classification: E44, F15, F36, G15, G21, G34, P34, M16, O11, O16
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